New York Financial Regulator Approves Two New Stablecoins GUSD and PAX
New York Financial Regulator Approves Two New Stablecoins
Since the crypto community started to raise concerns about Tether (USDT), there has been a significant increase in the introduction of stablecoins that intend to oust the troubled cryptocurrency. Most recently, two such coins have been launched and have already been approved by the New York Department of Financial Services.
Earlier today, the aforementioned New York financial regulator announced the approval of both Gemini Trust and Paxos Trust as issuers of stablecoins pegged to the US dollar. The tokens, known as Gemini Dollar (GUSD) and Paxos Standard respectively, are both ERC20 standard tokens built on the Ethereum blockchain. Similarly, they both backed on a one-to-one ratio by the US dollar stored in American banks that have FDIC insurance covers.
According to Maria Vullo, a superintendent at the Department of Financial Services, the state of New York is committed to promote responsible innovation as the fintech space continues to evolve rapidly. Maria added that the approvals of the two stablecoins are a testament that the company intends to safeguard the interests of consumers by imposing a stringent regulatory framework on cryptocurrency startups.
Notably, the two firms, Paxos Trust and Gemini Trust, had to comply with a number of measures before getting approval from the financial oversight authority. Such requirements included conforming to anti-fraud, anti-terrorisms, consumer protection, and anti-money laundering measures. Moreover, the companies were obligated to specify in their trends and conditions that if either the stablecoin or the fiat money available upon redemption is used in an illegal activity, the regulator has the right to seize, freeze, forfeit or destroy the token. The same rules apply when the stablecoin is subject to a legal order or proceedings.
Charles Cascarilla, the CEO of Paxos, thanked the New York Department of financial Services for approving the Paxos Standard token. He stated that the stablecoin intends to facilitate a frictionless global economy by offering a redeemable, regulated and audited token.